Charging regulators with flouting the law, the American Bankers Association has asked a federal appeals court to limit credit union membership to employees from a single company.
The ABA, in a motion filed late Wednesday, said the National Credit Union Administration is deliberately defying the U.S. Court of Appeals for the District of Columbia by continuing to allow occupation-based credit unions to accept members who work at unrelated companies. A ruling is expected in early September.
The appeals court ruled on July 30 that NCUA violated the law by allowing AT&T Family Federal Credit Union to accept employees from more than 150 companies as members. It ordered a trial court judge to decide how to disassemble AT&T Family.
NCUA, in an Aug. 6 letter, told credit unions that the ruling affects only AT&T Family. It vowed to continue approving applications to expand fields of memberships.
The NCUA letter infuriated the ABA and led to its court filing. "This is so outrageous that we could not sit still and let them go about their illegal ways for the months and months and months that they hope to be able to string out these judicial proceedings," said Michael Crotty, the ABA's deputy general counsel. "We think the court's decision imposed upon them is an obligation to at least hold everything in place pending a final outcome."
NCUA reacted sharply to the ABA's charges, saying its motion "mischaracterizes the court's decision and NCUA's actions in an attempt to discredit the agency," NCUA General Counsel Robert Fenner said in a statement. "As an agency of the federal government, we conduct our business in accordance with all applicable laws and court decisions."
Separately this week, the Independent Bankers Association of America urged Attorney General Janet Reno to ignore expected pleas from the NCUA to appeal the case to the U.S. Supreme Court.
"Prudent and fair public policy requires that the D.C. Circuit's unanimous, well-reasoned decision in the AT&T Family case be allowed to stand," IBAA president Leland M. Stenehjem Jr. wrote in a letter to Ms. Reno.
Steven Bisker, an Alexandria, Va., lawyer who represents several credit unions, said the appeals court did not specify whether its ruling applies to just AT&T Family or to the whole industry.
The trial judge will make that call, he said.
"If that is the case, then it doesn't foreclose NCUA from approving other select employee groups for other credit unions," Mr. Bisker said. Lawyers said they don't expect a trial court decision until early next year.
